Research On Default Risk Management Scheme Of Credit Card In WH Commercial Bank

With the popularity of credit cards,the pattern of“buy now and pay later” become a reality.While bringing convenience to consumers,interest income from credit cards can also create rich profit for commercial banks.However,as the credit card itself is loan consumption,there is inevitably a risk of default by the customer.At present,many commercial banks only focus on business growth,increasing the credit card issuance,but ignore monitoring the risk of default.On the basis of literature review at home and abroad,this thesis takes WH commercial bank as the research object and designs a default risk management scheme based on Analytic Hierarchy Process.Firstly,this thesis introduces the default status.By analyzing different types of default risks and the reasons of default in credit card business in WH Commercial Bank,this thesis addresses that the default risk management scheme should focus on establishing a comprehensive default risk assessment system.Secondly,the reasons of default risk include four first-level factors—basic situation,professional situation,economic situation and credit standing.Through analyzing background data,experts' selections and computing the weights,a series of second-level indicators will be used in the assessment system.By making use of background data in WH commercial bank,this assessment system will score these second-level indicators according to their values.At last,the consumer's credit score equals to the total score of all secondlevel indicators.In order to validate the reliability,this thesis selected 3 credit card holders of a bank with no default,potential default and default as examples.A large number of customer samples data is also selected to be applied to credit rating with this new default risk management scheme.The evaluation result shows that this scheme achieves the goal of default risk management and balances the benefits and risks.